118
political thinking, hence the hegemony of neo-liberalism in the African political economy. There is therefore a need for Africa to define its own economic model which is appropriate to the region.
119
looking in relation to international trade. The Lagos Plan blamed the structural adjustment programmes of the International Monetary Fund (IMF) and the World Bank for the African economic crisis and the vulnerability of African economies to world-wide economic shocks like the 1973 oil crisis.
The implementation of neo-liberalism in Africa was actually codified by the Washington consensus with a view to managing the debt crisis in developing countries, especially in Africa and South America. According to Williamson (2004), Washington Consensus was a set of economic policies called upon for developing countries by the International Monetary Fund (IMF), the World Bank and the USA Treasury in 1989 (Williamson, 2004:1). Neo-liberalism was later to be consolidated through coercion by the USA as it dominated global political dynamics in the war against terror. The America neo-liberal democratic principles were then expected to be pursued by all states in the world, lest they were to be regarded as being on the side of the so- called terrorists. The neo-liberal drive was soon to include transnational corporations with the support of Western states. (Satgar, 2009:39; Bond, 2005:232; Hobden and Jones. 2011:133-136).
Harrison (2010) observed that the period 1979 to 1981 was commonly viewed as the time when neo-liberalism was established as a global political and economic policy (Harrison, 2010:18). He noted further that it was only with reference to Africa that region-wide problems associated with the state and marketisation solutions were put forward. Africa was viewed as a region which had failed to create ‘proper’ market economies. This led to the 1989-1994 World Bank reports repeating the same issues as the problem in Africa. There was then the drive by the so called
‘development community’ which assigned itself the mission of creating proper markets in Africa. ‘Special funds’ for Africa were put aside to facilitate neo-liberal transformation. These funds become common in African states, but they came with many conditions, policy advice, technical assistance and aid. All this was skilfully done to bring about neo-liberal reforms. These efforts produced poor results and led to different reactions by the countries. Economic structural adjustment programmes led to greater suffering of the poor (Harrison, 2010:18).
According to Harrison, there is evidence that the much talked about foreign direct investment in Africa focused mainly on mineral enclaves and the desire to evacuate these minerals for use in value addition and wealth creation processes elsewhere was evident (Harrison, 2010:10). This
120
was mainly in the hands of transnational corporations. This is one of the key issues requiring serious consideration in rethinking how to restructure capitalism in Africa.
Saad-Filho and Johnston (2005) stated: “We live in the age of neo-liberalisms” (Saad-Filho and Johnston, 2005:1). Saad-Filho and Johnston believed that transnational corporations and elite groups have to an ever-increasing degree continued to acquire and concentrate power amongst themselves because of the implementation of an economic and political ideology scholars identified as ‘neo-liberalism’. This view suggests an endless, selfish accumulation of wealth and power which was identified by Veblen, (1898) as one of the characteristics of capitalism. The capitalist character in neo-liberalism identified by Saad-Filho and Johnston brings together neo- liberalism and capitalism as two sides of the same coin, ‘global neo-liberal capitalism’, which is wealth extractive rather than wealth creating for regions like the SADC. In rethinking the African economic ethic of indigenisation, a capitalist approach that creates wealth for the region becomes imperative.
Harrison (2010) contended that “…the tendencies to integrate spaces into global capitalism has produced modern forms of economic fragility and spatial differentiation, the disintegrative- effects of which are mediated by the state system” (Harrison, 2010:6). He noted further that in economic fragility it is important to take note that Africa has a very large proportion of small and vulnerable economies. Many economies rely on the export of primary commodities and raw materials whose prices have been generally falling or unstable. The value addition of most of these primary products happens elsewhere outside Africa where much greater value is created for the large economies outside Africa. There is a high debt to export ratio and many countries have huge debts to the IMF and World Bank. The vulnerability of Africa became worse from the 1990s, especially at the turn of the century, when Africa had five per cent of developing countries’ income and two-thirds of its debts (Prempeh, 2006:141). This demonstrates the uneven terrain on which neo-liberal global capitalism is operating. Evidence suggests that in Africa a worse off economic situation emerging out of global neo-liberal capitalist economic policies as argued by Bond (2005):
“Africa’s debt crisis worsened during the era of globalisation. From 1980 to 2000, sub- Saharan Africa’s total foreign debt rose from US$60 billion to US$206 billion, and the
121
ratio of debt to GDP rose from 23 per cent to 66 per cent. Hence, Africa now repays more than it receives. In 1980, loan inflows of US$9.6 billion were comfortably higher than the debt repayment outflow of US$3.2 billion. But by 2000, only US$3.2 billion flowed in while US$9.8 billion was repaid, leaving a net financial flows deficit of US$6.2 billion”
(Bond, 2005:239).
Neo-liberalism has persisted and remains widely accepted in Africa despite some strong criticisms and questionable benefits to the majority poor people, as observed by George 1999:7).
However, the theory of evolutionary economics argues that as more and more inadequacies of an economic policy became apparent, a new economic approach emerges. On many occasions, liberalism has been replaced by various forms of realism in explaining the global political and economic dynamics which include trade. The fact that there are shortcomings being noted against neo-liberalism is enough to invalidate the argument that neo-liberalism is the only plausible economic policy for the whole world.
Global neo-liberalist capitalism in the African context should be viewed as a global economic development with new historical conditions and dynamics of accumulation of wealth. The changes or reorganisation of global capitalism were brought about by neo-liberalism increased international mobility of capital, greater integration of the global market and the restructuring of global production. This development is a clear departure from the colonial era framework of wealth creation and accumulation. Essentially, the deference lies in the role of the state in the process of wealth accumulation. During the colonial era the state played a critical role by facilitating and creating an environment which was exploitative and in favour of whites in Africa. The post-colonial approach in the form of neo-liberalism gives the state the ‘night watchman’s role’ which has no significant strategic influence on the daily operations of the economy. The whole market is open for penetration. Resources are made available for exploitation and there are no restrictions to capital inflows and outflows. As Satgar (2009) argued, that the making of what he calls the Afro-neo-liberal capitalism was a violent and brutal process made up of three overlapping post-colonial conjunctures:
First, the defeat of the actual and potential radical post-colonial state-led development projects – revolutionary nationalist, African socialist and Maxist-Leninist; second, the
122
debt crisis and national adjustment; and third, limited democratisation and continental restructuring to meet the requirements of transnational capital (Satgar, 2009:40-41).
The Washington consensus which came along with the second conjuncture, to manage the debt crisis, has unravelled through its failure to bring development. Instead, it brought about social crisis to the World through poverty and inequality and the impasse on World Trade Organisation (WTO) negotiations (Satgar, 2009:41). Satgar seems to have the answers as he argues what he observes as the essence and logic of the new scramble for Africa:
The irony in the neo-liberal accumulation strategies is that they are not development oriented. Privatisation, liberalisation, public-private partnerships, surveillance-based good governance, a truncated individual right-based discourse and regular elections are all strategies to entrench the power of capital over society and state (Satgar, 2009:46).
Africa’s acceptance of neo-liberalism reflects a defeat of progressive political agencies on the continent giving way to the new scramble for Africa. The biggest questions which arise then are who in the complex matrix accumulates wealth, whose capital enjoys the mobility, and which markets are for which goods, produced by whom. The African capital has not managed to exercise notable mobility outside the region, neither has its potential been fully exploited within the region. There is therefore a need for a capitalist environment which promotes greater mobility of African capital. Neo-liberal capitalism talks of opening markets, and, in this case, and as indicated by the global trade trends, the African markets is meant to buy high value goods from the developed economies while it exports low value raw materials. There is a need for Africa, especially the SADC which is endowed with natural resources, to come up with value addition strategies which would improve the value of the region’s exports into the global market.
This is informed by the fact that in the period 2000 to 2010 the value of industry’s contribution to GDP was 32 percent while an export value of USD $ 89, 151.33 million was realised against USD $ 91,608.15 million imports into the region (Southern African Development Community, 2017). Again, the SADC market has to be restructured to consume more SADC products to allow for greater local wealth creation and hence Southern African Development Capitalism or
‘SADCapitalism’. With a population of over 277 million, the SADC offers a huge market whose potential needs to be exploited. Perhaps to realise benefits from the new hegemonic neo-
123
liberalism some form of ‘Afro-neo-liberalism’ for the continental accumulation of wealth should be considered. This should be a form of African capitalism which takes account of the continent’s historical conditions as argued by the theory of evolutionary economics. Murove (2010:139) has argued that indigenisation carries with it the idea of creating African capitalists who will play a leading role in domesticating or appropriating neo-liberal global capitalism.
Many reasons were given for the failure of western capitalism in Africa. Given the cultural and historical differences and levels of poverty in Africa, there is need to come up with deliberate policies that promote indigenous entrepreneurs and industries to participate in the African capitalist economy. This process would help domesticate capitalism in Africa and create the so- called and much needed ‘Africapitalism’. In this case, ‘Africapitalism’ is simply a way by which Africa can accumulate wealth for its development with indigenous entrepreneurs taking the lead in the process. To allow neo-liberalism in its original form to determine the course of development in Africa might lead to similar failures as observed in the failed IMF and World Bank 1980s neo-liberal structural adjustment programmes which left the majority poor people worse off than they were before the policies were introduced (Dani, 1990:99; Konadu- Agyemang, 2000:469). There is a need to domesticate or discipline capitalism for regional development through some form of indigenisation strategy. For the SADC, this could be called
‘SADCapitalism’, a way by which the SADC as a region strives to create and accumulate wealth, especially in the face of highly competitive global neo-liberal capitalism.
The current African economic ethic of indigenisation appears not to be a good argument or alternative to respond to the failure of global neo-liberalism. In justifying indigenisation, African states argue that the marginalised blacks were put at a disadvantage by the colonial policies and cannot survive in the global neo-liberal capitalist market system without affirmative action. The weak economic standing and economic inefficiencies arising from the absence of technology and fundamental capitalist principles in indigenous African culture make Africans weaker than well- established western transnational capitalists. At the end of the day, black Africans would not survive or prosper in a highly competitive neo-liberal global capitalist economy. If neo- liberalism is then to be judged on the basis of consequentialism and utilitarianism in ethics, then it would be criticised for being unethical. An ethical system of distributing wealth would need to be found. There is therefore a need for some form of indigenisation or affirmative action to
124
protect Africans against the more powerful and efficient global capitalists. In the post-colonial SADC, attempts have been made to redistribute wealth and economic power using policies such as indigenisation. Indigenisation has had its fair share of criticisms, hence the need to rethink the ethic.
The SADC will have to find alternatives to institutions such as the Bretton Woods institutions, (the International Monetary Fund (IMF) and the World Bank), and the World Trade Organisation which are international financiers of nations and regulators of world trade. The challenge is that most SADC economies do not own or have total control over natural resources in their countries such as minerals and land which could help in providing wealth with which to create the alternative institutions. Perhaps the starting point would be to improve the state of resource ownership and control. Once established such alternative SADC institutions would speak with one voice in a coordinated way supporting a purposeful regional effort indigenisation using regional financing models which promote the regional comparative advantage leveraged on individual member states’ comparative advantages. Such an approach will help promote the region from being a mere exporter of basic raw materials and developing its own manufacturing and value addition capacity rather than countries competing for foreign attention from developed and economically powerful countries like China and the USA which have for many years been using the desperation by SADC countries to perpetuate neo-colonialism. Instead, the region should develop an economic symbiosis that aims at giving the region a global economic voice.
The recent move by the Africa heads of state to meet with the African entrepreneurs at the inaugural 20-22 March 2017 African Economic Platform (AEP) is a step in the right direction as they sought to provide the policy space for Africans across sectors collectively to “…set their own agendas and explore realistic continental and global opportunities” (Mushawevato, 2017:3).